Friday, June 16, 2017

Mises would say this?

For instance, if John places $100 in demand deposit he doesn't relinquish his claim over the deposited $100. He has an unlimited claim against his $100. This demand deposit should be properly regarded as not different from money in a safe deposit box. Hence, when a bank uses the deposited money as if it were lent to him the bank generates another claim on this deposited money.

Frank Shostak talking about fractional reserve banking makes this statement. I would think Mises was a libertarian and cash shares risk. Why would a depositor expect a risk free investment? This idea reeks of socialism, the idea that government insures against currency risk.